In our weekly series From the Furrow, host Britt O’Connell and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.
This week, Britt is joined by Jenni Birker, Broker and Grain Marketing Advisor with Ever.Ag. What did USDA’s latest report hold for grain markets? What is CONAB saying about South America’s crop? Britt and Jenni discuss those topics and a whole lot more.
To get in touch with Jenni, email her at Jenni.Birker@Ever.Ag.
Questions or comments? Topics you’d like to hear us discuss? Contact us at Insights@Ever.Ag.
(Transcript auto-generated)
00;00;00;10 – 00;00;09;00
VOICEOVER
Future trading involves risk and is not suitable for all investors. Content provided in the statement is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;09;02 – 00;00;35;26
BRITT
Hello and welcome to From the firm brought to you by ever Insights, where each week we talk with subject matter experts on news and topics affecting the grain markets. I’m your host, Brett O’Connell. Let’s start with a review of the market. Today is Tuesday, March 12th. Currently, May 24, corn is unchanged at 441 and three quarters, with May 24, soybeans up $0.06 at 1185 and a quarter.
00;00;36;02 – 00;00;46;10
BRITT
Turning to our guest this week, it’s our privilege to have Jenny Burger, grain marketing adviser from our very own ever team. Welcome to the show today, Jenny.
00;00;46;12 – 00;00;47;15
JENNI
Thanks for having me, Brit.
00;00;47;17 – 00;01;10;05
BRITT
Jenny, it’s been kind of an exciting change of direction for the grain markets here as of late. Just ahead of last week’s was the report, we saw the markets turn this different kind of shade of green that we hadn’t seen for a while. What gives? Jenny, what’s your thoughts? Why did we ahead of the report, kind of start seeing more green on the screen?
00;01;10;11 – 00;01;34;27
JENNI
Well, Green’s an indicator of spring, right? We love spring. Melt the snow with the moisture in the ground. And apparently green is the color for all things, including the markets. Our March report was pretty typical with no major surprises, which is kind of interesting that we saw a little bit of pre report positioning there. Probably and then moved into a report that is essentially usually kind of the spring cleaning of reports.
00;01;34;29 – 00;01;43;12
JENNI
It’s an old crop report. So not looking at new acres or projecting yields or anything like that right now, I think that’s kind of what we saw is just some spring cleaning here.
00;01;43;13 – 00;01;58;00
BRITT
Jenny, you know, you mentioned in the report there really wasn’t a lot for U.S. production. A lot of eyes were paying attention to what USDA was going to do with South American production. What were some of the updates on that front? Anything there that surprised you?
00;01;58;03 – 00;02;13;24
JENNI
So the USDA revised their estimate on Brazil’s soybean crop. They took it slightly lower, but it still stayed above consensus. But really, there wasn’t a whole lot they did to the South American numbers. And I think a lot of that is playing into the weather that they’ve had down there. It’s just been hot and dry.
00;02;13;27 – 00;02;33;27
BRITT
I want to spend some time talking about that soybean number in Brazil, because that one in particular is one that there’s some discrepancy on. You look at NAB’s numbers, they’re certainly quite a bit lower than that. But, you know, you’ve got independent analysts out there that are coming in maybe a little closer to 145 million metric tons. What’s your take on that?
00;02;33;28 – 00;02;41;12
BRITT
Jenny, are we going to continue to see potential Brazilian soybean production cuts? Is that going to take some time?
00;02;41;14 – 00;03;02;20
JENNI
Well, I think, you know, they didn’t get the rain they thought they were going to get in January and February. I mean, this dry stretch started for them, you know, back when they were trying to fill pods and stuff on their soybean crop. So I do think there’s definitely potential that we can see some adjustments here. I’d probably lean towards, you know, what Conad came out with today, saying that they’re cutting that number a little more significantly than the USDA did.
00;03;02;20 – 00;03;08;25
JENNI
They’re the ones that are there. So I lean towards the eyes that are in a country as opposed to those of us looking in from above.
00;03;08;27 – 00;03;29;08
BRITT
Absolutely. Speaking of in-country, I want to spend a little bit of time. You know, you mentioned spring, and certainly it’s a time of year where we do start to see the markets perk up a little bit because naturally we’re moving into our growing season and we’re taking on a little bit more risk, if you will. Certainly weather is going to be the forefront of everyone’s mind here.
00;03;29;10 – 00;03;49;01
BRITT
Talk to us a little bit about the funds carrying an aggressive short position as we’re moving into spring. What do you expect to see here as we move forward, Jenny? And as you’re working with producers, helping them manage risk through these types of markets, what’s your advice to them as we move into a really busy time of year and of a time of year that tends to bring more volatility?
00;03;49;04 – 00;04;19;00
JENNI
Yeah. As we move into spring, you know, you definitely see weather starts to play a bigger role. Price buys acres or in some cases doesn’t buy acres for the farmer that’s willing to change their rotations. So really it’s a time to reassess everything and kind of say, where are we? Where do we think we’re going? What indicators are the funds or the markets giving us that says, you know, what direction we could see through spring, through planting, through that early growing season, and how are we going to change our plan to ensure profitability around that.
00;04;19;01 – 00;04;39;05
BRITT
To that point, Jenny, you mentioned weather, and that’s certainly on the front of everyone’s mind, particularly in the Midwest, where a number of areas are a bit drier than they would maybe like to be. Ultimately, Jenny, we’ve got weather is something that’s on the forefront of a lot of producers minds right now and a lot of folks are concerned and maybe rightfully so.
00;04;39;08 – 00;04;53;20
BRITT
It is a bit dry. But what do you tell folks when it’s March 12 and they’re concerned about a drought? How do you help them manage through that? Because the reality is, I think a lot of what you do is psychological as much as it is anything.
00;04;53;21 – 00;05;10;01
JENNI
I mean, it is always important to keep in mind a drought, if not a drought, until the drought. Right. Until we are to that point, you have to keep moving forward. So let’s have some numbers in place. Let’s make sure we have our crop insurance in place and let’s make sure we’re working with what’s in front of us and not a what if scenario.
00;05;10;07 – 00;05;21;27
JENNI
We can always look outside and see the worst case scenario or the best case scenario, depending on what kind of outlook you have. But really looking at that plan and saying, here is my true risk right now, let’s plan around that.
00;05;22;00 – 00;05;44;27
BRITT
I love your advice there. Right. Keeping the numbers in front of you, trying to keep a level head about yourself, trying not to let it impact some of the decisions that you make. But naturally, there are some concerns. Folks want to make sure that they don’t sell more than they produce. What are some other tips on sort of not just managing the emotions around that, but also managing that production element that you share with producers?
00;05;44;27 – 00;05;46;24
BRITT
You know, what are some of the options that folks.
00;05;46;24 – 00;06;04;23
JENNI
Have when it comes to managing our risk? We have a couple of different things that we look at. Of course, we want to look at your break, even your numbers, not the neighbors, not the coffee shop talk. We want to know what does it take for you to get a crop into the ground, out of the ground to town and money in your bank for the profitability of your business, of your operation?
00;06;04;23 – 00;06;27;26
JENNI
You know, another way we do that is by utilizing the options forward marketing. Keeping in mind where we’re at in the growing season and what makes sense as far as that goes, but also covering those underpriced bushels, using your puts to protect that bottom line and give you a little bit of insurance policy to go forward and say, you know, my worst case scenario really is this because I have quit covering those on price bushels.
00;06;27;29 – 00;06;40;27
JENNI
The same can be said for once you make that sale, everybody says it’s going to be dry, it’s going to be dry. We’re not going to have a crop. Well, if you’re the guy that has the crop and you’ve made the sale early on in the season, maybe we look at protecting the upside on that sale protocol over the top.
00;06;40;27 – 00;06;47;22
JENNI
It’s really a living, breathing thing. How we manage your risk, the emotion and all the things that go into marketing that crop.
00;06;47;23 – 00;07;07;06
BRITT
You mentioned put options before and certainly seems like a good management tool, if you will, because it seems like it might provide some flexibility for guys who aren’t necessarily ready to make a sale, but they still want to protect these good prices, knowing that in a lot of cases we’re still above break even on four and in particular.
00;07;07;09 – 00;07;22;08
JENNI
Yeah, I mean, having that put out there, you get to the end of the year and if you haven’t been in a position where you’re willing to make that sale, you can go ahead and exercise that point and say, Hey, this was my bottom line, this was my bottom dollar. I said for 60 was a good, solid spot to protect.
00;07;22;08 – 00;07;31;14
JENNI
I’m going to turn that into a sale here now. So it provides you flexibility where you can manage it throughout the year, but you can also turn that into a sale if you don’t have the opportunity to market that grain.
00;07;31;18 – 00;07;47;20
BRITT
What are the other things you mentioned, Jenny, in the spring of the year? Everybody’s planting decisions or rather tweaking them. I guess they probably have already been made, but then folks are looking at potentially tweaking them. There’s a lot that goes into that weather prices and so on and so forth. As you work with producers, what are you hearing on the acreage front?
00;07;47;20 – 00;07;53;19
BRITT
First of all, are you hearing of any changes, one direction to the other, or do you kind of see anything playing out on that front?
00;07;53;24 – 00;08;11;28
JENNI
I really do feel like the American producer, they do their jobs to the best of their abilities for not only themselves, but for the land that they’re working. And I think it takes a lot to get a farmer out of his rotation. You know, whatever that rotation is for, whatever area you live in, in eastern Iowa, we’re corn and soybeans for the most part.
00;08;11;28 – 00;08;31;13
JENNI
And those rotations, there’s a lot more to them than just a price attached to them. I mean, it’s your soil health. It’s, you know, managing pests, you know, all the things that go into planting both crops. Sometimes those decisions are made a year or two in advance. It does take a lot to make a farmer move out of that corn bean rotation or in some cases even a corn on corn rotation.
00;08;31;14 – 00;08;40;25
JENNI
I do not foresee a lot of changes in that front with the guys that we work with in this area just because they’ve made those decisions based off many other things other than price.
00;08;40;27 – 00;08;53;23
BRITT
What about some of the fringe acres? Have you heard anything on that front as far as any expected changes? It seems like they’ve been getting a lot of attention here lately because that is often where we do see a lot of the changes come from.
00;08;53;23 – 00;09;11;24
JENNI
Yeah, I think you’re right. I mean, Fringe Acres are where we see the changes specifically. If you do have some of those acres that maybe are hay production acres and maybe your third or fourth year on that and maybe it’s time to tear it up, maybe it’s not. Is this the year to go ahead and put a crop in there instead to break up that cycle or vice versa?
00;09;11;24 – 00;09;23;28
JENNI
You could see that go other directions. If we’re talking about wheat or cotton and things like that, as we get outside of just this corn belt area. And that’s where you can see changes in those fringe acres. And I do think that markets can buy those acres.
00;09;24;05 – 00;09;47;20
BRITT
All right, Jenny, this has been a really great conversation. I’ve really enjoyed having you share with our listeners a little bit about markets here. But we do like bold predictions. I’m going to put you on the spot. March 28, Orderly stocks, planning intentions, reports coming out. What is the USDA going to bring forward for corn and soybean planting intentions 2020 for Jenny.
00;09;47;23 – 00;10;03;29
JENNI
That’s a big one. It I am a fat girl. So what I will do, I’m not. You’re not going to like my answer because I’m not going to answer your question. I’m going to tell you I’m going to look at the pre report estimates and I’ll land somewhere right in there with consensus, because that’s what I do. I work with facts.
00;10;03;29 – 00;10;19;28
JENNI
What I will say is I would be prepared for that March 28 report to provide some kind of market movement. That’s what we need to plan on. So make sure that your position with your marketing plan to be ready for that market to move whichever way it moves, because I guarantee you it’s going to do well.
00;10;19;28 – 00;10;30;02
BRITT
Jamie, thanks again for joining from the World. If folks would like to get in touch and learn a little bit more about what you and the crew at every you’re doing to help guys manage risk, how can they best do so?
00;10;30;05 – 00;10;37;11
JENNI
Yeah, you can do so on our Web site ever dot egg or you can reach any of us by email. Just first name, last name and everybody.
00;10;37;16 – 00;10;56;27
BRITT
Awesome. Thanks for joining again, Jenny. If you’ve enjoyed listening to from the for all, share our podcast with the friend. Give us a thumbs up like and subscribe wherever you listen to all of your favorite podcasts. Thank you to the ever Egg Insights crew for producing, mixing and mastering today’s production.
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
—
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2023, confidential and proprietary.
Latest
In our weekly series From the Furrow, host Britt O’Connell and fellow grain … Read more
In our weekly series From the Furrow, host Britt O’Connell and fellow grain … Read more
Related
Block Cheese: $1.9425, up $0.0425, 5 lots traded Barrel Cheese: $2.1250, up … Read more